In its second-half 2025 outlook, UBS Global Wealth Management forecast the index would climb to 6,500 by mid-2026, underpinned by policy stabilisation, structural earnings growth and likely rate cuts from the Federal Reserve.
“After a strong run for global markets and with uncertainty still high, we expect only modest returns for global equity indices by year-end. For example, our December target for the S&P 500 is 6,200,” the wealth manager said.
“However, we see stronger return potential in 2026 and beyond. Investors who are under-allocated to equities should consider gradually increasing exposure to diversified global stocks or balanced portfolios to position for future gains.”
US equities remain favoured over European peers due to stronger earnings momentum, more flexible policy settings and leadership in structural themes like artificial intelligence, the bank’s wealth management arm said, adding that more aggressive Fed easing versus the ECB should support US assets.
“For the remainder of 2025, we believe that US equities will outperform European equities and that the US should remain a core component of a well-diversified global equity strategy,” UBS Global Wealth Management said.
“The key question for investors, then, is what the right overall allocation to US equities should be within a global portfolio.”
According to UBS, with the US making up more than 64 per cent of the MSCI All Country World Index, a simple rule of thumb is to allocate at least half of a global equity portfolio to American stocks.
“Investors significantly below this level should consider building up US allocations ahead of a period of expected relative outperformance.
“Meanwhile, those with US equity allocations well above this level should use near-term strength to diversify – potentially into emerging market equities, where we also expect outperformance, or into our TRIOs.”
Tech to remain key
The strongest performance in the US is expected to come from the technology, healthcare and financial sectors, UBS said.
“AI investment and adoption remain key drivers. Despite concerns about a slowdown, first-quarter earnings, and management commentary confirm that supportive trends are intact, and we see a long runway for AI-driven growth,” it said.
While potential semiconductor tariffs later this year could introduce some volatility, UBS said the sector remains high quality and continues to generate the highest return on capital across all sectors.
Regarding healthcare, UBS said it rates the sector as attractive.
“Policy clarity, compelling current valuations and upside to earnings estimates for select companies should drive a rebound. Promising new therapies in large, untapped markets – such as obesity and Alzheimer’s – should help offset patent expirations.
“We believe the sector’s defensive characteristics can also provide ballast if the economy slows.”
UBS also rates the financials sector as attractive, citing easing regulation, early signs of a recovery in capital markets activity and improving net interest margins and income as key drivers of a rebound.
